Over the decade and a half that preceded the 2008 global financial crisis 2 While other European countries had been stuck in the mud, Spain performed much better at reforming its welfare systems and labor markets, as well as improving flexibility and lowering unemployment. Indeed, before the global crisis that hit Spain in the spring of 2008 the country had become one of Europe’s most successful economies. The following two and a half decades were a period of phenomenal growth and modernization. The 1980s also witnessed Spain’s integration into NATO (1982) and the European Community (1986). The following decade also witnessed the Socialist Party being elected to actual power in 1982, bringing a new aura of modernity to the country. These developments were followed by the progressive return of Spain to the international arena-where they have been relatively isolated during the dictatorship. A negotiated transition period, which has been labeled as a model for other countries, paved the way for the elaboration of a new Constitution, followed by the first free elections in almost forty years. King Juan Carlos, Franco’s heir, oversaw the return of democracy to the country. 1Īfter Franco’s death in 1975, the graph turned upward again. And there was much political instability: Spain suffered forty-three coup d’états between 18, a horrendous civil war between 19, followed by thirty-six years of dictatorship under Generalísimo Franco. A vast empire was gradually lost, leaving Spain poor and powerless. After that, the history of the nation goes downhill until the 1970s. That is, the graph rises-bumpily at times, through 600 years under the Romans, 700 years under or partly under the Moors, and a century of empire-building-to the peak of Spanish power in the sixteenth century. The overall pattern of Spanish economic history has been described, crudely, as a graph shaped like an upside-down version of the letter ‘V’. The 2008 economic crisis, while not fully unexpected, came as a relative surprise given the strong performance of the Spanish economy during the first years of the twentieth century. This book will show that the financial crises were the result of a political bargain in which incentives and a lax regulatory framework favored developers, property owners, and bankers, thus confirming a central tenant: the crucial importance of domestic political institutions, the rules of the game, and the role of domestic players operating within those institutions. The economic crisis that started in 2008, part of the great recession that engulfed most countries, had profound consequences for the Spanish banking system. Yet again, the performance of the Spanish banking system was deeply connected to the performance of the Spanish economy, and progress in the banking sector was marred by the performance of the Spanish economy at large. In order to contextualize the banking games that inform the next chapters and to understand the overall consequences that the economic crisis had on Spanish banks and cajas, this chapter examines the economic crisis and analyzes its causes and consequences.
0 Comments
Leave a Reply. |